Why haven’t the markets reacted more to the geo-political risks, such as North Korea?

Friday, October 13th, 2017

David Clark, Chairman

As part of our Global FX meeting in Singapore the discussion on Geo-politics started with a puzzle: why are financial markets reacting so calmly in the face of considerable geo-political risks?

Regarding Asia, our members agreed that the markets were probably too sanguine on the North Korea situation. Either there may be a consensus that the risk of escalation is low, or alternatively, that the potential risk is so big that everybody is discounting it. Bottom-line: some geo-political risks are hard to price as ‘binary events’.

Geo-politics was just one of many discussions which ranged from the role of AI in trading and the emerging markets of Russia and China to the increasing need for Platforms to be as flexible as possible in this post-MiFID II world.

Download the Finance Hive Live Singapore post-meeting report for the views of our members and partners on these and many other issues facing the FX community today.

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